Peabody Energy Corporation (BTU) announced that it will redeem its 5.875% senior notes due 2016 on April 15, 2011, using its cash balance. The redemption price of the outstanding notes will be 100.979% of the aggregate principal amount of the notes, plus accrued and unpaid interest, if any, up to April 15, 2011.
The total amount required for redemption will be $218.1 million. Peabody will leverage its strong balance sheet, which stood at $1.3 billion at the end of fiscal 2010, to redeem the notes.
In August 2010, the company issued $650.0 million of 6.5% 10-year Senior Notes due September 2020 and used the proceeds to redeem its outstanding $650.0 million of 6.875% Senior Notes due in March 2013. The redemption allowed the company to lengthen the maturity of its senior indebtedness and lower the coupon rate.
Peabody Energy’s operating earnings per share in fourth quarter and fiscal 2010 exceeded the Zacks Consensus Estimates. The company expects earnings per share in the first quarter of 2011 to be in the range of 45 cents to 65 cents.
The Zacks Consensus Estimates for first-quarter 2011, fiscal year 2011 and fiscal year 2012 are, respectively, 60 cents per share, $4.81 per share and $6.18 per share.
Peabody Energy’s peer CONSOL Energy (CNX) recently redeemed its 7.875% Notes due March 1, 2012, through the net proceeds of a new issuance of $250 million of 6.375% senior notes due 2021.
Peabody Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain a long-term Neutral rating on the stock.
Based in St. Louis, Missouri, Peabody Energy is involved in the exploration, mining and production of coal for its global consumers.
PEABODY ENERGY (BTU): Free Stock Analysis Report
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